Market Update
?“Stocks saw their worst week since March 2023 as investors continue to panic that the Fed’s effort to cool the economy has lasted too long, and that job growth will fall beyond what the central bank is shooting for.” Source: Bloomberg, 9/6/24
Manufacturing is slowing with the ISM Manufacturing New Orders at the lowest level since May 2023:
More confirmation of a slowdown shows up in diesel consumption falls:
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Job openings are now the lowest since January 2021:
?US YIELD CURVE TURNS POSITIVE FOR ONLY SECOND TIME SINCE 2022
Source: Bloomberg, 9/4/24
?“While equity traders eye a potentially imminent new S&P 500 record, bond traders are watching yield curve closely for a similarly important milestone: curve is close to dis-inverting between 2y and 10y tenor points, having spent past 26 months in inversion:”
Dr. Lacy Hunt argues that the Fed’s current policy stance is too restrictive for the economy’s growth rate. He points out that the average growth of real per capita GDP and GDI is around 1.4%, aligning with the long-term trend since the 1970s. With the Fed nearing its 2% inflation target (excluding questionable assumptions about shelter costs), Lacy suggests a more appropriate policy rate is 3.33%. Instead, the Fed’s current rate is significantly higher at 5.33%, which he believes is far too restrictive, and the Fed is not acknowledging that they are behind the curve.
–?Dr. Lacy Hunt, Thoughtful Money with Adam Taggart Interview, August 27, 2024
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On average, the S&P 500 has fallen 23.5% over a period of 195 days from the first Fed cut to the market low.? Keep this in mind if the Fed begins to cut rates in September!
领英推荐
?Hedge Funds Most Bearish on Commodities Since at Least 2011
By?Gerson Freitas Jr., August 9, 2024
Hedge funds are the most bearish on commodities prices in at least 13 years as fears of a deeper economic slowdown cast doubts on demand for everything from crude oil to metals and grains.
Money managers piled a combined net-short position of almost 153,000 futures and options across 20 raw-material?markets?in the week ended Tuesday, according to US Commodity Futures Trade Commission data compiled by Bloomberg. That’s the most on record, based on figures going back to 2011.?
?Conclusion
Economic data indicates that the economy is slowing down.? Many market participants believe that the Fed is behind the curve and has waited too long to begin rate cuts.? Commodities have been moving lower, economic data points are moving lower, and bond markets have been moving higher pushing rates lower.
The two most economically sensitive commodities, crude and copper, have been trading lower:?
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Truflation, a blockchain project that was designed to provide accurate economic information about inflation of goods and services, is now showing a 1.10% inflation rate versus the US Government’s CPI at 2.5%:
?The benchmark 10-year Treasury Yield has fallen to lowest level since June, 2023:
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The bottom line for me is that the Fed will need to start lowering rates at their next meeting on September 18th and continue to lower them if the economic data continues to show slowing.?
?Should you wish to engage in further discussion or have any questions, please let me know.
Financial Independence Coach | Teaching Personal Finance at the Intersection of Money and Life Strategy | Serving Professionals, Business owners and their Teams | Author of Household Finance 101 |
6 个月Great run down of various economic indicators ?? Also a good reminder of the historical precedent of a +20% market drop 195 days post initial rate cut. Question: After trillions of Covid money printing and many quarters of +5% money market funds - how much dry powder is sitting around, preventing the 20-30% drops in the SP that used to be par for the course... I know lots of folks sitting in cash waiting waiting for 2009..... I get a feeling that the system is ripe with cash and complacent investors ready to jump in the minute they see 10-15% drops.